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As Congress debates the fate of more than 10 million unauthorized immigrants living in the United States, their impact on the U.S. low-skilled labor force is an important consideration. In 2005, immigrants overall represented more than a fifth of low-wage workers—those earning less than twice the minimum wage—and almost half of workers without a high school education. Unauthorized workers were nearly a tenth of low-wage workers and a quarter of low-skilled workers. The number of low-wage and low-skilled native-born workers fell between 2000 and 2005, due to improvements in their educational attainment but also due to decreasing labor force participation. This report, underwritten by the Hitachi Foundation, describes recent trends in the immigrant labor force and their implications for the U.S. economy.
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Immigrants are playing an increasingly important role in the U.S. labor force—at both the lower-skilled and higher-skilled ends (Kaushal and Fix 2006). Much of the debate around illegal immigration and comprehensive immigration reform during the past few years has centered on lower-skilled immigration and its effect on the U.S. economy. Researchers have studied the wage and employment effects of immigration on U.S. workers, especially the lower-skilled ones. Some economists have attributed rising unemployment rates and stagnating wages among lower-skilled native workers to immigration, but there is no consensus about the extent of the impact (Borjas 2006; Borjas and Katz 2005; Card 2005; for literature review, see Murray, Batalova, and Fix 2006). For instance, Borjas (2003) found that wages of native workers declined by 3 percent between 1980 and 2000, and by 9 percent among the least educated workers, due to immigration. In contrast, Ottaviano and Peri (2006) found that wages of native workers actually rose by 1.8 percent between 1990 and 2004, while the least educated workers experienced a much smaller decline of 1.1 percent (Ottaviano and Peri 2006).
Currently, there is also no consensus on the overall economic and fiscal impact of immigrants. There are concerns about the burden on public coffers from the large influx of lower-skilled immigrants (Camarota 2004), but there are also positive outlooks, with recent research suggesting significant economic activity due to immigration, even in states with high shares of immigrants that are recent arrivals and lower skilled (Kasarda and Johnson 2006).
In this brief, we focus on immigrants' role in the low-wage and lower-skilled labor force and examine trends over the first half of this decade. Between 2000 and 2005, the U.S. immigrant population increased from 31.1 to 35.7 million, and foreign-born shares of the U.S. population and labor force increased slightly. At the same time, the number of unauthorized immigrants—the focus of the debate surrounding immigration reform—increased past 11 million (Passel 2006). The number and share of immigrants, especially the unauthorized, increased most rapidly in low-wage, low-skilled jobs in key areas of the economy, such as agriculture, construction, manufacturing, and services. Concurrently, the numbers of native-born low-wage and lower-skilled workers fell substantially, suggesting that immigrants were filling the demand for lower-skilled labor and/or displacing some of the least-educated native workers. During this period, employment and labor force participation rates fell for the least-educated native-born workers, both men and women. But improvements in the educational attainment of natives, especially women, contributed to the declining numbers of native workers in the low-wage workforce. Thus, the demographic evidence regarding the impact of immigrants on the low-wage, native-born labor force is mixed.
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